23 June 2012

Sky-high prices and a plentiful
supply of stock have driven rental yields of private homes down to levels not
seen for almost 12 years.

Overall gross yields were just 3.8
per cent in March, unchanged from December, according to a property research
firm.

Apart from a one-off dip last
September, when yields hit 3.7 per cent, rental returns have not been this low
since December 2000.

Levels vary across the island. While
some mass-market projects are enjoying higher than average yields of 5 per cent
or more, there are some inner-city apartment blocks with returns of only 1.9
per cent.

The firm said the huge supply of
completed homes expected in the next few years could push yields down even
further if demand does not increase in tandem.

But other experts say that while gross
yields have been falling, net yields have remained fairly stable as interest
rates are at record lows. They add that while rental demand is expected to
remain healthy this year, yields might come under pressure in 2014 and 2015
when a record number of homes are due for completion.

The wait for new condominiums in
Jurong and Lakeside will soon be over, with several new projects on the cards.

It has been a long time coming. The
area has not had a condominium launch in more than a year, while suburbs across
the island have been abuzz with construction.

That will change in the coming
months, as the whole Jurong Lake District is primed to be the biggest
commercial hub outside the city centre.

Last month, the tender closed for a
residential site in Boon Lay Way that can yield about 600 units. The
99-year-leasehold site is a short walk from the Jurong East MRT station.

Another site, which can host over 820
units, is due to be launched for sale later this year. The plot is near
Lakeside MRT station, one stop from Jurong East on the East-West line.

In all, over 2,000 new private homes
are expected to be built in the Jurong and Lakeside areas by 2017, consultants
estimated.

Higher prices have been achieved in
Jurong. Upcoming condos there command nearly $1,000 to $1,200 per sq ft (psf),
while 99-year-leasehold condos in Jurong East, Chinese Garden and Lakeside sold
for an average of $883 psf.

Freehold residential property
Westvale Condominium has been sold to RL West Pte Ltd, a subsidiary of Roxy
Pacific Holdings Ltd, for $77.5 million, or about $883 per sq ft per plot ratio
(psf ppr).

The 62,710 sq ft site, located along
Pasir Panjang Road, comprises 32 apartments located in a four-storey walk-up
block.

The plot is zoned for residential use
under Master Plan 2008, with a gross plot ratio of 1.4, a maximum building
height of five storeys, and a potential gross floor area of up to 87,798 sq ft.

A development charge for the plot is
expected to be incurred should the new developer decide to utilise the
additional balcony space, which constitutes another 10 per cent of gross floor
area. This charge would amount to $625,000.

Several big-ticket bungalow deals
have been transacted recently - both in the Good Class Bungalow (GCB) market on
mainland Singapore and at Sentosa Cove.

An old two-storey freehold bungalow
at White House Park changed hands recently at $24.8 million, which translates
to nearly $1,650 per sq ft (psf) on freehold land area of about 15,036 sq ft.

At Jervois Hill, two vacant plots
have been transacted in the past few months.

The more recent deal, at $21 million,
is for a plot of 15,095 sq ft. Word in the market is that the unit land price
of $1,391 psf is low for the area because there is an electrical substation on
the site.

The option for the sale of another
plot on the street is for $32 million or $2,118 psf but this transaction is
said to have a long completion period. If this transaction is completed, it
will set a new record for a Good Class Bungalow Area, surpassing the $2,081 psf
achieved in July last year for 6 Chatsworth Road, diagonally opposite the
Indonesian Embassy.

Over in the upscale waterfront
housing locale of Sentosa Cove, an ocean-fronting bungalow along Cove Drive
changed hands last month for nearly $22.2 million, which works out to around
$2,787 psf on land of 7,963 sq ft.

It is understood that a few bungalow
deals are brewing on Treasure Island, and at higher prices than the $1,766 psf
fetched for a transaction about two months ago.

That deal, which involved a bungalow
sitting on land of 8,496 sq ft, sold for $15 million.

A crackdown is under way on property
agents who lodge misleading advertisements for industrial sites.

More than 20 warning letters have
been issued to agents this year and some unauthorised uses are being
investigated.

The move - a joint effort between the
Council for Estate Agencies (CEA) and the Urban Redevelopment Authority (URA) -
is in line with the Government's push to weed out rogue tenants and landlords
in industrial areas.

Businesses such as shops and tuition
centres have been using industrial sites, which have lower rents than
commercial premises, but they have been accused of pushing up costs as they
compete for space with genuine industrialists.

The CEA has investigated 32 property
agents this year who allegedly marketed industrial units wrongfully.

Some cases are pending, but letters
of advice have been handed to 23 agents who 'did not check the classification
of the premise use and wrongly advertised industrial units at various
developments such as Oxley Bizhub, One Commonwealth and One Pemimpin', CEA's deputy
director for licensing Yeap Soon Teck told The Straits Times.

Similarly, the URA said it has
investigated some users at places like The Alexcier in Alexandra Road, First
Centre in Serangoon North and Midview City in Sin Ming Lane and given them time
to stop the unauthorised use.

On Wednesday, the agencies issued a
joint circular to remind agents and landlords that it is their responsibility
to give accurate information to potential buyers. It stated that properties
slated for industrial use should not be marketed for 'business' - which can be
misinterpreted as offices - or 'offices', which are not allowed in such
buildings.

The onus is also on developers to
ensure accurate information on marketing materials and that appointed agents do
not mislead buyers.

Misleading marketing of units will
breach the CEA's Code of Ethics and Professional Client Care, which can lead to
fines of up to $75,000 and/or suspension or licence revocation.

The URA said that if the unauthorised
use does not cease within a stipulated timeframe, the penalty for these users
could be a fine of up to $200,000 or a one-year jail term or both.

URA rules stipulate that at least 60
per cent of the total floor area of an industrial site has to be used for core
industrial activities like warehousing and production. The remaining space can
be taken up by some non-industrial uses like ancillary offices and staff
canteens.